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RLI Q3 Earnings Surpass Estimates, Plunge Y/Y, Revenues Miss
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RLI Corp.’s (RLI - Free Report) third-quarter 2017 operating earnings of 4 cents per share surpassed the Zacks Consensus Estimate by a whopping 100%.
However, the bottom line plummeted 89.2% year over year. The third-quarter results were significantly impacted by the occurrence of Hurricanes Harvey, Irma and Maria that led to deterioration in the combined ratio as well. Nonetheless, the company witnessed a strong performance at its casualty and surety segments.
Net income plunged 92% year over year to 4 cents per share.
Operational Performance
Operating revenues for the quarter totaled $196.2 million, down 0.5% year over year due to lower net premiums earned. Also, revenues missed the Zacks Consensus Estimate of $198 million by 0.9%.
Gross premiums written dipped 0.5% year over year to $220.4 million due to weaker performance by the Property and Surety segments.
Total expenses shot up 13.4% year over year to $200.8 million due to higher loss and settlement expenses and policy acquisition costs.
The company incurred an underwriting loss of $14.9 million against an underwriting income of 10.6 million, due to results hampered by back-to-back hurricanes. Combined ratio deteriorated 1400 basis points year over year to 108.2%. Nonetheless, the company has been able to deliver underwriting profits for the last 21 straight years.
The property and casualty (P&C) insurer’s net investment income improved nearly 5.1% year over year to $14.2 million. Total return from the investment portfolio was 1.4%, while the bond portfolio returned 1.0%. The equity portfolio returned 3.4%.
Financial Update
The company exited the third quarter with total investments and cash of $2.2 billion, up 7.4% from the year-end 2016.
Book value was $19.95 per share as of Sep 30, 2017, up 6.5% from Dec 31, 2016.
Long-term debt was $148.9 million, reflecting a 0.1% increase from the 2016-end level.
Statutory surplus grew 4.8% year over year to $900.9 million.
Net cash flow from operations surged 33.6% to $71.4 million in the quarter.
Dividend Payout
On Sep 20, 2017, the company paid out a cash dividend of 21 cents per share, remaining unchanged from the prior quarter. In the last five years, the P&C insurer has paid cumulative dividends of over $635 million.
Business Update
During the third quarter, the company saw its A+ (Superior) financial strength rating getting reiterated by the credit rating giant A.M. Best for its insurance subsidiaries namely, RLI Insurance Company, Mt. Hawley Insurance Company and Contractors Bonding and Insurance Company.
Among other players from the insurance industry having reported third-quarter earnings, the bottom line at Brown & Brown, Inc. (BRO - Free Report) , MGIC Investment Corporation (MTG - Free Report) and The Progressive Corporation (PGR - Free Report) beat their respective Zacks Consensus Estimate.
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RLI Q3 Earnings Surpass Estimates, Plunge Y/Y, Revenues Miss
RLI Corp. Price, Consensus and EPS Surprise
RLI Corp. Price, Consensus and EPS Surprise | RLI Corp. Quote
Net income plunged 92% year over year to 4 cents per share.
Gross premiums written dipped 0.5% year over year to $220.4 million due to weaker performance by the Property and Surety segments.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Among other players from the insurance industry having reported third-quarter earnings, the bottom line at Brown & Brown, Inc. (BRO - Free Report) , MGIC Investment Corporation (MTG - Free Report) and The Progressive Corporation (PGR - Free Report) beat their respective Zacks Consensus Estimate.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
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